August 2020
Census 2020
Did you know? Data from the Census brings $7.4 billion in federal tax dollars every year to our communities – that’s $1,623 per person, per year in North Carolina according to a George Washington University report. Ten minutes of your time can shape your and North Carolina's future for the next 10 years. The 2020 Census impacts funding, planning & services, which all have a direct impact on jobs and the state's economy. Incomplete data today sets an inaccurate baseline for tomorrow – compounding the impact for NC for the next 10 years. We only have until September 30, 2020, to get a complete count. Approximately 4 million North Carolinians have yet to be counted. If you are one of those, please respond today by visiting my2020census.gov or by calling (844) 330-2020. Let's #MakeNCCount!
Have you completed and returned your 2020 Census form yet?
Yes
No


WAKE FOREST INVESTMENT ADVISOR PLEADS GUILTY TO WIRE FRAUD


In an August 3rd press release, the US Attorney's Office for the Eastern District of North Carolina announce that a Wake Forest man pleaded guilty that day to wire fraud following an investigation by the NC Secretary of State’s Securities Division and the IRS Criminal Investigation Division.

According to court documents, Anthony Wayne March, 49 years old, operated the nonprofit 501(c)(3) entity Asset Trader, located in Rolesville, NC, between 2012 to 2015.

March represented that Asset Trader offered educational services to professionals and taxpayers in the area of exit planning. Asset Trader’s stated educational mission allowed it to obtain classification as a 28 U.S.C. § 501(c)(3) tax-exempt non-profit organization. Asset Trader used its §501(c)(3) tax-exempt status to solicit tax deductible donations in exchange for charitable gift annuities and to recruit referral sources to obtain assets from potential donors.

A charitable gift annuity is essentially a planned giving contract between a donor and a charity that allows donors who make a large gift to the charity through money, securities or other assets to get a partial tax deduction as well as fixed monthly payments from the charity for life.

Through Asset Trader, March and his co-conspirators engaged in and executed what is commonly known as a “Ponzi” scheme to defraud investors by inducing them to invest with Asset Trader. During the course of the scheme, March solicited at least 22 victims to invest over $8.1 million in charitable gift annuities and other products offered by Asset Trader.

March and Asset Trader sold these securities to victims as retirement or exit planning vehicles classified as donations to March’s § 501(c)(3) tax-exempt non-profit organization. March did not utilize any of the victim’s money for charitable purposes; rather, he spent the money on “Ponzi” payments, his own lavish lifestyle, and expenses of the scheme. March pleaded guilty today to conspiracy to wire fraud and faces up to twenty years imprisonment and a $250,000 fine when he is sentenced during the court’s November 3, 2020 term.

When investing in charitable annuities, it’s vital to check the legitimacy of the charitable organization in question and to be sure that the nonprofit in question is aware of the contract.

Please call the North Carolina Investor Hotline at 1-800-688-4507 to check the registration of not only the person offering the investment, but the investment opportunity itself. 

Robert J. Higdon, Jr., U.S. Attorney for the Eastern District of North Carolina, made the announcement after U.S. Magistrate Judge Kimberly A. Swank accepted the plea. The Office of the U.S. Bankruptcy Administrator for the Eastern District of North Carolina provided substantial assistance. Assistant United States Attorney Ethan Ontjes, Special Assistant United States Attorney Brian Behr, and Special Assistant United States Attorney Kevin Harrington represented the United States. Harrington also is the Deputy NC Securities Administrator and Director of the NC Secretary of State Securities Division.


Graham, N.C. Man is Sentenced to More Than Five Years for $1.1 Million Investment Scheme 


U.S. Attorney Andrew Murray announced that on Thursday, August 13, 2020, Mark Colin Ramsey, 50, of Graham, N.C., was sentenced to 65 months in prison for operating a $1.1 million investment scheme. U.S. District Judge Martin Reidinger also ordered Ramsey to serve three years of supervised release and to pay restitution in the amount of $1,098,333.92.

North Carolina Secretary of State Elaine F. Marshall joined U.S. Attorney Murray in making the announcement on August 14.

According to filed court documents and statements made in court, from April 2008 to September 2013, Ramsey defrauded more than 20 victims out of nearly $1.1 million through a fraudulent investment scheme. Court records show that Ramsey operated various purported investment companies, including Hypertrend, Cascade Investments, GH Gardner, Layton-McCall, Pandrox, and Good Living. Ramsey induced victim-investors by falsely representing that their money would be used to make legitimate investments. He also promised his victims that they would receive a guaranteed return on their investments, and that their principal investments would not be at risk. During the relevant time period, Ramsey used multiple purported investment corporations, as well as numerous fraudulent documents, including false Form-1099s, fake investment agreements, and fabricated stock certificates, to convince potential victims his investments were legitimate and profitable. To further induce victims, court records reflect that Ramsey showed potential investors documents purportedly backing up his claim that he had made one million dollars from a ten thousand dollar investment.
Rather than invest the victims’ money as promised, Ramsey spent the investors’ money on Ponzi-style payments to other investors and to fund his personal lifestyle.

According to court records, Ramsey failed to disclose to his victims, some of whom were at or near retirement age, that he was not registered to sell securities in the State of North Carolina, or that the investment opportunities he presented were not registered as required by statute. Always call the North Carolina Investor Hotline at 1-800-688-4507 before signing over your money in an investment to check the registration status of the individual offering an investment opportunity, as well as the registration of the investment opportunity itself. t

On August 26, 2019, Ramsey pleaded guilty to securities fraud. In making this announcement, U.S Attorney Murray thanked the Securities Division of the North Carolina Department of the Secretary of State for their investigation of this case.

Assistant U.S. Attorney Daniel Bradley, of the U.S. Attorney’s Office in Asheville, prosecuted the case.

In March 2019, Andrew Murray, U.S. Attorney for the Western District of North Carolina, announced the Office’s Elder Justice Initiative, which aims to combat elder financial exploitation by expanding efforts to investigate and prosecute financial scams that target seniors; educate older adults on how to identify scams and avoid becoming victims of financial fraud; and promote greater coordination with law enforcement partners. For more information please visit: https://www.justice.gov/usao-wdnc/elder-justice-initiative.

NC Secretary of State Marshall Reappointed to Lead Two Key Committees for the National Association of Secretaries of State
 
The National Association of Secretaries of State (NASS) this month reappointed NC Secretary of State Elaine Marshall as the NASS representative to the Uniform Law Commission (ULC) Advisory Committee and Co-Chair of its Securities Committee.
 
“It’s an honor to be reappointed to these leadership roles and to help shape the dialogue about the vital issues of securities regulation, as well as the ULC as it works to assure the legal framework across states keeps pace with technological changes,” said Secretary Marshall.
 
The Uniform Law Commission provides states with model legislation designed to bring clarity to crucial areas of statutory law. Much of the existing commercial law in North Carolina began as proposals by ULC. Subject matter practitioners provide input to the uniform law commissioners as they consider changes to existing law or creating new laws.
 
The Securities Committee reviews the actions of the North American Securities Administrators Association (NASAA) and other stakeholder organizations, Congress, and relevant federal agencies with an interest in securities regulation.
 
Secretary Marshall will serve as Co-Chair of the Securities Committee with Nevada Secretary of State Barbara Cegavske.
 
The NC Secretary of State is the lead agency in administering the state’s Securities laws by registering and regulating securities offerings and investigating and prosecuting significant white-collar crimes.
 
Founded in 1904, NASS is the oldest nonpartisan professional organization of public officials in the United States. 


NC Investment Advisers:
Save the Date!



Since 2010, the NC Secretary of State Securities Division has conducted periodic "best practices" workshops for state-registered investment advisers. These day-long workshops have proven to be extremely popular, attracting over 2100 attendees through the years.

Through these workshops, we have been able to help advisers better understand their compliance responsibilities in the ever-changing world of securities regulation, resulting in fewer violations and better service to their clients. Until now, these workshops have always been conducted in-person -- which we have preferred --because we believe that face-to-face interaction fosters greater dialogue between our office and advisers about the real-world situations they encounter and how they may operate within the current regulatory landscape.

We had put off scheduling our next round of workshops hoping that the COVID-19 pandemic would make it possible for us to resume the in-person sessions. Unfortunately, that appears less and less likely for the foreseeable future. Consequently, we have decided to move forward with scheduling two abbreviated WebEx (gasp!) workshops. They will be offered on consecutive days, Tuesday, September 22nd, and Wednesday, September 23rd. Invitations to register will be sent out next week, so be sure you whitelist this email address (jmaron@sosnc.gov) so you don't miss the invitation. Both sessions will include the same information and will run from 9:15 AM -- Noon, so you need only register for one session. We are pleased to announce that Secretary Elaine F. Marshall will join us briefly each day.

We hope you will plan to join us!
New NASAA Study Examines Issues Related to Financial Professionals and Diminished Capacity
The North American Securities Administrators Association (NASAA) on July 21st released a report examining issues related to diminished capacity and cognitive impairment that may affect financial professionals.

The report was based on a series of discussions between state and provincial securities regulators with broker-dealers, investment advisers, and compliance consultants to understand how the industry handles issues related to diminished capacity and cognitive impairment of financial professionals.

“Discussions with industry members and other regulators clearly indicate that firms are encountering financial professionals with diminished capacity or cognitive issues that stem from a variety of factors, including an aging workforce,” said Christopher W. Gerold, NASAA President and Chief of the New Jersey Bureau of Securities.

Financial professionals experiencing diminished capacity raise complex issues regarding providing effective service to the client and compliance with their duties under the securities laws, the report said, including those related to standards of conduct, supervision, books and records, continuing education and fraud.

The methods and resources used to address sensitive situations where financial professionals exhibited signs of cognitive impairment varied by firm size and structure. The report summarizes how firms are managing these situations through communication, education, and succession planning.

The report identified several areas for firms to consider, including whether appropriate staff are trained to recognize the red flags of diminished capacity and cognitive impairment. The report also suggested firms encourage or even require all financial professionals to establish a succession plan regardless of age. Those interviewed throughout the industry believe there are roles for regulators to play in identifying the problem and setting guidelines and goals on how to address it.

“Addressing financial professionals with cognitive impairment or diminished capacity requires sensitivity and respectfulness. Each situation will present differently and firms will have varying resources to address these concerns,” notes the report, which was prepared by a working group chaired by Claire McHenry, Deputy Director of the Nebraska Bureau of Securities, within NASAA’s Board-level Committee on Senior Issues and Diminished Capacity, chaired by Deborah Gillis of the New Brunswick Financial & Consumer Services Commission.
Tips for Teachers: Investing for Retirement -- Investor Bulletin


As a teacher, you have a number of choices to make when investing for retirement. The SEC’s Office of Investor Education and Advocacy issued a Investor Bulletin to help teachers make informed investment decisions, including about 403(b) and 457(b) plans -- tax-advantaged retirement savings programs often offered to teachers of public educational institutions. More information for teachers is available in our A Guide for Teachers: Saving and Investing for K-12 Educators.

Key Takeaways

  • Do your homework on the investment products available to you. Don’t be afraid to ask questions — it is up to you to select investments that best meet your financial objectives. 
  • Understand how much you will pay in fees and costs. Someone is making money from your investment. Ask about how much others may earn in fees or commissions — it could save you thousands of dollars for your retirement.
  • Contact your employer to find out your options for investment professionals or vendors. Take advantage of resources that can assist you in researching those options. 

Investment Options for Teachers

One of the best ways to build wealth is by saving and investing over a long period of time. The earlier you start investing, the more your savings and investments will grow over time due to compound interest, helping you reach your investment goals with less money out of pocket. 

Many public schools, colleges, and universities offer investment plans for retirement to their teachers and other employees. These plans are often a supplement to teacher pension plans, which on their own may not afford teachers adequate retirement savings. 

These supplemental plans usually include tax-advantaged retirement accounts called 403(b) plans (some employers may offer similar 457(b) plans). Contributions to these plans can be automatically deducted from a teacher’s pay, and a teacher’s employer also may contribute to the account.

As a defined contribution plan, unlike a pension, a 403(b) plan does not promise a specific payment upon retirement -- the teacher, as the plan participant, bears the primary responsibility to fund the account and often how to allocate the investments. 

Ask Questions

Contact your employer to find out your vendor options for your specific 403(b) plan. And make sure you ask questions and understand whether there will be fees taken out of your investment and how your vendor gets paid.

Determining which investment products best meet your financial objectives and identifying a vendor who sells those products is very important. Different vendors sell different types of products, and some vendors only offer a limited number of choices.

Here are some questions to ask when choosing a vendor for a 403(b) plan:

  • How will you choose investments to recommend to me?
  • Given my financial situation, should I choose an insurance agent, an investment advisory service, or a brokerage service? Why or why not?
  • Help me understand how fees and costs might affect my investments, including vendor fees. What are the total fees and commissions I will pay over time? 
  • If I give you $1,000 to invest, how much will go to fees and costs, and how much will be invested for me? 
  • Can you give me this information in a simple form, so that I can easily compare to similar information from other vendors?
  • Do you make more money by selling me one product over another?
  • Do you receive a commission for selling a particular product and, if so, how much? What other types of compensation do you receive for selling the product?
  • How might your conflicts of interest affect me, and how will you address them?
  • As a financial professional, do you have any disciplinary history? For what type of conduct?
  • What is your relevant experience, including your licenses, education and other qualifications? What do these qualifications mean?
  • Who is my primary contact person? Is he or she a representative of an insurance company, an investment adviser or a broker-dealer? Whom can I talk to if I have concerns about how this person is treating me?



Beyond Hollywood:
Money Laundering in the Securities Industry

When three hapless employees inadvertently embezzle a bunch of cash in the movie “Office Space,” they decide the best way to cover it up is to launder it. But the thing is, they don’t even really know what money laundering is and they learned that even the dictionary couldn’t fill them in.

If you want to understand what money laundering is, and more specifically, the efforts brokerage firms must take to prevent and detect it, stay tuned for this fascinating episode of FINRA's UNscripted podcast. They have something better than the dictionary: they have Blake Snyder and Jason Foye, two members of FINRA’s Anti-Money Laundering (AML) Investigative Unit.

On this two-part episode, Blake and Jason explain what money laundering is, how it looks different in the securities industry, how that makes regulation different for the securities industry, what FINRA’s Anti-Money Laundering Investigative Unit does, and more.

Continue the conversation with part II

Resources mentioned in this episode:



Investor Alert:
Broadly Advertised Investments


The SEC’s Office of Investor Education and Advocacy (OIEA) and the Division of Enforcement’s Retail Strategy Task Force urge investors to be mindful when investing in offerings that are broadly advertised.

What is "general solicitation"?

You may see investment opportunities broadly advertised—or what federal securities laws also refer to as generally solicited—to the general public. These advertisements may be on social media, TV, on the radio or in a newspaper. You may be invited to a seminar or dinner at a nice hotel to introduce you to an investment opportunity. You may receive a general communication directing you to a website detailing an offering.  

Why does it matter?

Just because an offer to invest is advertised openly doesn’t mean it complies with federal securities laws. Don’t presume that an offering is lawful because you learn about it through a radio advertisement or seminar, or even through a personal contact. Investors should remain vigilant even when an investment opportunity is broadly promoted. 

In SEC v. A Better Financial Plan, LLC, a promoter of investments in private funds offering investments in ownership interests in life settlements violated the federal securities laws by offering and selling securities to over 300 retail investors in offerings that were required to be registered under the federal securities laws—but were not. The promoter used general solicitation including radio ads, direct mailers with an invitation to a free steakhouse dinner, and a website with dozens of videos, even though the offerings were unregistered and did not qualify for exemptions from registration in violation of the securities laws. The promoter also committed a separate violation of the federal securities laws when he acted as a broker in a separate offering, even though he was not registered as a broker with the SEC.

The federal securities laws require that issuers offering securities either provide detailed information about the issuer and how the investment will work—in a document known as a registration statement, which is filed with the SEC—or they must have a legally recognized reason for not having to provide this information—known as an exemption from registration. The first time a company registers an offering and sale of its securities is called an initial public offering, or IPO. The registration process required under the federal securities laws helps to protect investors by making sure investors receive sufficient information about the investments, including how the money may be used and the material risks of the investment. Investors should be beware of offerings that do not comply with federal securities laws.  

What can I do?

First, always check the background of the person offering you an investment opportunity. An investment professional trying to sell you securities generally has to be registered with the SEC to do so. An easy way to check whether an investment professional is registered is to type the person’s name into the Check Out Your Investment Professional box on Investor.gov.  Unregistered investment professionals who sell securities perpetrate many of the securities frauds that target individual investors.  

Second, determine if the offering has been registered or is being conducted in reliance on an exemption under the federal securities laws. Ask the person offering the opportunity about whether the offering is registered with the SEC. Companies must disclose important information with the SEC to register a securities offering on a website called EDGAR. This includes information about what your money will be used for and some of the known risks of the investment. Although the SEC reviews certain forms and filings for compliance with disclosure obligations, the SEC never validates or approves an offering. You can research whether an offering is registered by searching the EDGAR database.  If a promoter claims that an offering is registered but there is no associated registration statement on EDGAR, you should not invest.

Some registration exemptions still require the company or its promoters to provide investors important information about the company and the offering.  You should be particularly cautious of an investment opportunity if the promoter will not provide information you need to make an informed decision about whether to invest.    

Watch out for these common red flags of fraud:

  • Claims of high returns with little or no risk. Promises of high returns, with little or no risk, are classic warning signs of fraud. If the investment sounds too good to be true, it probably is.
  • Unregistered investment professionals. As mentioned, unregistered persons who sell securities perpetrate many of the securities frauds that target retail investors.
  • Aggressive sales tactics. Scam artists often pitch an investment as “once-in-a-lifetime” to create a false sense of urgency.
  • Problems with documents. Avoid an investment if the salesperson will not provide you with anything in writing.  
  • No net worth or income requirements. As mentioned, because of the greater risk, many offerings that are made on an unregistered basis require investors to be accredited investors or limit the amount you can invest. If the offering is unregistered and there are no investment limits or net worth or income requirements for investing, that is a red flag to consider whether the issuer is complying with the federal securities laws. 

Want to read more about other investment-related topics? Check out our
full-range of investor education brochures on our website at https://www.sosnc.gov/online_services/securities/investor_education_booklets.
One Call Could Save Your Life Savings!
 
Is that individual offering you an investment opportunity licensed to sell securities in North Carolina? Is the investment opportunity itself registered? Know before you sign!
While registration in and of itself is no guarantee against fraud, not being registered is a very big red warning flag.

We urge you to take five minutes to call our NC Investor Hotline at 1-800-688-4507 to see if the person you have been dealing with – perhaps even for years – is properly registered and/or has a disciplinary history. You can also check to see if the actual investment itself is properly registered.

Pick up the phone and call us. You owe it to yourself and your family to check. And please also consider sharing the information in this newsletter with YOUR contacts or your social networks. Doing so will help keep your friends and loved ones safe, too. More information can be found at https://www.sosnc.gov/divisions/securities/for_investors.
SEC Announces Creation of the Event and Emerging Risk Examination Team

The Securities and Exchange Commission on July 28th announced the creation of the Event and Emerging Risks Examination Team (EERT) in the Office of Compliance Inspections and Examinations (OCIE). The EERT will proactively engage with financial firms about emerging threats and current market events and quickly mobilize to provide expertise and resources to the SEC's regional offices when critical matters arise. 

OCIE is responsible for conducting examinations of SEC-registered investment advisers, investment companies, broker-dealers, self-regulatory organizations, and transfer agents, among others. OCIE uses a risk-based approach to most effectively allocate its resources to fulfill its mission of promoting compliance with the U.S. securities laws, preventing fraud, monitoring risk, and informing policy. Working collaboratively with OCIE exam staff in the regional offices, the EERT will focus on implementing OCIE exam priorities, including those identified in OCIE's annual examination priorities publication. The EERT will help ensure, through examinations and other firm engagement and monitoring activities, that firms are better prepared to address exigent threats, incidents, and emerging risks. The EERT will also work with OCIE staff to provide expertise and support in response to significant market events that could have a systemic impact or that place investor assets at risk, such as exchange outages, liquidity events, and cyber-security or operational resiliency concerns.

The SEC also announced that Adam D. Storch has been named Associate Director of the EERT. In this role, Mr. Storch will oversee a dedicated, multidisciplinary team of specialized examiners, industry experts, accountants and quantitative analysts.

"I thank Pete Driscoll, Marc Berger and their colleagues for driving this important initiative forward," said Chairman Jay Clayton. "As recent events have demonstrated once again, market and operational risks can emerge suddenly. We should be working to increase our ability to react, including bringing our various resources to bear to these situations."

"The EERT will assist OCIE in the fulfillment of its mission, including protecting the clients and customers firms serve, and enhance its ability to effectively respond to exigent threats and incidents in our markets," said OCIE Director Peter B. Driscoll. "Adam brings a wealth of valuable experience, understanding of risks, and a background ideally suited to develop and lead this unit."

"This new team will work alongside the many dedicated OCIE examiners across the country to quickly address critical market events," said Marc P. Berger, Director of the SEC's New York Regional Office. "Adam's leadership experience and knowledge of the exam program and its registrants make him well-equipped to stand up and guide the EERT, and I look forward to working closely with the entire team."

"I am excited to continue working with the talented and mission-driven team in OCIE and the dedicated staff throughout the agency," said Mr. Storch. "It is an honor to have the opportunity to establish and lead the newly created EERT and to continue to serve the SEC and support its important mission."

Previously, Mr. Storch was a Senior Advisor to the Director of OCIE, where he focused on risk, strategy, and innovation, and led several impactful initiatives to protect investors. Mr. Storch first joined the Commission as the Managing Executive and Chief Operating Officer of the Division of Enforcement. Mr. Storch has also held several executive roles in the private sector, including Chief of Staff and Chief Operating Officer of Legal and Compliance at Marsh & McLennan Companies and Vice President of the Business Intelligence Group at Goldman Sachs.




News from the Regulators
FINRA Publishes 2020 Industry Snapshot

FINRA has published the 2020 FINRA Industry Snapshot, an annual statistical report on the brokerage firms, registered representatives and market activity that FINRA regulates.

The latest edition includes data ranging from the size and geographic distribution of the firms FINRA regulates to the number of individuals in the industry, and from trading activity to how firms market their products and services. All of the data appear in aggregate form.

“The Snapshot provides visibility into the broad range of firms, individuals and trading activity that FINRA oversees. This year’s edition includes new data on markets activity, including fixed income and equity trading by venue and product type,” said FINRA Chief Economist Jonathan Sokobin.
SEC Adopts Rule Amendments to Provide Investors Using Proxy Voting Advice More Transparent, Accurate and Complete Information

The Securities and Exchange Commission on July 22 voted to adopt amendments to its rules governing proxy solicitations designed to ensure that clients of proxy voting advice businesses have reasonable and timely access to more transparent, accurate and complete information on which to make voting decisions. The amendments aim to facilitate the ability of those who use proxy voting advice—investors and others who vote on investors’ behalf—to make informed voting decisions without imposing undue costs or delays that could adversely affect the timely provision of proxy voting advice.

“The majority of our Main Street investors participate in our public markets through ownership of mutual funds and ETFs managed by professional market participants,” said Chairman Jay Clayton. “Today’s actions ensure that those who take on the responsibility of investing and voting on behalf of our Main Street investors have the accurate and decision useful information necessary to make an informed voting decision for the benefit of those investors.”    

The amendments condition the availability of two exemptions from certain of the federal proxy rules often used by proxy voting advice businesses on compliance with tailored and comprehensive conflicts of interest disclosure requirements. The exemptions are also conditioned on two principles-based requirements designed to ensure that: (1) registrants that are the subject of proxy voting advice have such advice made available to them in a timely manner, and (2) clients of proxy voting advice businesses are provided with an efficient and timely means of becoming aware of any written responses by registrants to proxy voting advice. These conditions reflect certain observed market practices and are intended to ensure that proxy voting advice clients have access to information that is more transparent, accurate and complete.

In addition, the amendments codify the Commission’s longstanding view that proxy voting advice generally constitutes a solicitation under the proxy rules, and make clear that the failure to disclose material information about proxy voting advice may constitute a potential violation of the antifraud provision of the proxy rules.

The Commission also supplemented its prior guidance regarding the proxy voting responsibilities of investment advisers in light of the Commission’s amendments to the proxy solicitation rules. 

This Commission action provides supplemental guidance to assist investment advisers in assessing how to consider additional information from issuers that may become more readily available as a result of the proxy solicitation rule amendments. The guidance also addresses circumstances where the investment adviser utilizes a proxy advisory firm’s electronic vote management system as well as disclosure and client consent obligations when investment advisers use these services for voting.  

Five federal regulatory agencies finalized a rule on June 25 modifying the Volcker rule’s prohibition on banking entities investing in or sponsoring hedge funds or private equity funds—known as covered funds. The final rule is broadly similar to the proposed rule from January. 

The Volcker rule generally prohibits banking entities from engaging in proprietary trading and from acquiring or retaining ownership interests in, sponsoring, or having certain relationships with a hedge fund or private equity fund.

Like the proposal, the final rule modifies three areas of the rule by:

  • Streamlining the covered funds portion of rule;
  • Addressing the extraterritorial treatment of certain foreign funds; and
  • Permitting banking entities to offer financial services and engage in other activities that do not raise concerns that the Volcker rule was intended to address.

The rule will be effective on October 1.
New Research from FINRA Foundation Examines Financial Capability of Women Behind Bars, Highlighting Gender Disparities and Grim Financial Challenges


New research from the FINRA Investor Education Foundation offers insights into the financial knowledge and habits of incarcerated women across multiple measures of financial capability and literacy, exposing the deep financial challenges facing women in prisons.

The Gender and Financial Capability from Behind Bars study found that incarcerated women in Arkansas have the highest poverty rates and use of predatory lenders, as well as the lowest levels of financial literacy and financial assets—in comparison to incarcerated men and the state’s general population.

“This research highlights the challenges that women, in particular, face as they re-enter society after time in prison—and it couldn’t be more timely as coronavirus infection rates lead jurisdictions to release more inmates,” said Gerri Walsh, President of the FINRA Foundation and FINRA’s Senior Vice President for Investor Education. “More than just a snapshot of men and women incarcerated in Arkansas, this data provides practitioners in the field a unique opportunity to better understand the financial challenges facing women behind bars and to explore community resources, tools and other supports necessary to increase financial literacy and financial capability.”

Some of the key findings from the study include:

More than half of the incarcerated women surveyed live below the poverty line.
Fifty-four percent of incarcerated females live below the poverty line compared to 16 percent of non-incarcerated females. Eighteen percent of non-incarcerated males live below the poverty line compared to 26 percent for incarcerated males.
 
Incarcerated women do not have retirement savings.  
Only nine percent of incarcerated females and 10 percent of incarcerated males had retirement savings, compared to 42 percent of non-incarcerated females and 50 percent of non-incarcerated males.

Incarcerated women are the most frequent users of high-cost borrowing methods. The use of these non-traditional banking methods was positively associated with the likelihood of recidivism.  
More than 75 percent of both incarcerated males and females use check-cashing services, compared to less than 10 percent of men and women not in prison.

“These findings demonstrate the growing need for additional research and resources as communities consider how to address gender gaps in general and more specifically, the even larger divide for incarcerated women,” Walsh said. 


Enforcement News

The NC Department of the Secretary of State Securities Division is responsible for administering and enforcing the state’s securities laws. To read our latest enforcement actions, please visit https://www.sosnc.gov/divisions/securities/admin_action.
  • On August 13, Mark Colin Ramsey, 50, of Graham, N.C., was sentenced to 65 months in prison for operating a $1.1 million investment scheme. U.S. District Judge Martin Reidinger also ordered Ramsey to serve three years of supervised release and to pay restitution in the amount of $1,098,333.92. North Carolina Secretary of State Elaine F. Marshall joins U.S. Attorney Andrew Murray in making this announcement. According to filed court documents and statements made in court, from April 2008 to September 2013, Ramsey defrauded more than 20 victims out of nearly $1.1 million through a fraudulent investment scheme. In making the announcement, U.S Attorney Murray thanked the Securities Division of the North Carolina Department of the Secretary of State for their investigation of this case. For more information, please see this press release.

  • On August 3, 2020, Anthony Wayne March, of Wake Forest, NC, pleaded guilty to wire fraud for his role in an $8.1 million Ponzi scheme (see press release). According to court documents, March, 49 years old, operated the non-profit 501(c)(3) entity Asset Trader, located in Rolesville, NC, between 2012 to 2015. March represented that Asset Trader offered educational services to professionals and taxpayers in the area of exit planning. Asset Trader’s stated educational mission allowed it to obtain classification as a 28 U.S.C. § 501(c)(3) tax-exempt non-profit organization. Asset Trader used its §501(c)(3) tax-exempt status to solicit tax-deductible donations in exchange for charitable gift annuities (“CGAs”) and to recruit referral sources to obtain assets from potential donors. Through Asset Trader, March and his co-conspirators engaged in and executed what is commonly known as a “Ponzi” scheme to defraud investors by inducing them to invest with Asset Trader. The Internal Revenue Service Criminal Investigation Division (IRS-CI), and the North Carolina Secretary of State, Securities Division conducted the investigation in this matter.

  • On June 11, 2020, Joseph Maurice Deberry, a/k/a Joseph Maurice Dewberry, 56, of Charlotte, appeared before U.S. Magistrate Judge David S. Cayer on June 11, 2020, and pleaded guilty to wire fraud, for orchestrating an investment scheme that defrauded victims of hundreds of thousands of dollars. According to admissions Deberry made in plea documents and the June 11th plea hearing, from 2016 through June 2019, Deberry fraudulently obtained hundreds of thousands of dollars from more than a dozen investors. As part of the scheme, Deberry induced victims to invest in entities with which he was affiliated, such as Pinnacle Investment Properties, LLC and Place Capital Group LLC, among others. Deberry typically represented to investors that their money would be used to further projects related to the construction of student housing at certain colleges in the Carolinas and other ventures. As Deberry admitted in court and in related filings, rather than use the victims’ money as he had represented, Deberry used a significant portion of their funds to pay for personal expenses like rent, entertainment and travel. Further, Deberry actively concealed from his victims the fact that he was under a Cease and Desist Order from the North Carolina Secretary of State's Securities Division prohibiting him from offering for sale, soliciting offers to purchase, or selling any securities in North Carolina. Deberry concealed this information from victims by, among other things, telling them that his name was Maurice Dewberry. Deberry pleaded guilty to wire fraud. The charge carries a maximum prison sentence of 20 years and a $250,000 fine. A sentencing date for Deberry has not been set. For more information, see this press release.

  • On April 16, 2020, the North Carolina Department of the Secretary of State, Securities Division entered into a Final Consent Order ("Order") with Ferry Capital Management, LLC ("FCM") and Paul Edward Ferry. The Order found that Respondents transacted business in North Carolina as an investment adviser and an investment adviser representative without being registered, in violation of the North Carolina Investment Advisers Act ("Act"). Pursuant to the Order, FCM and Ferry agreed to immediately cease and desist from violating any provisions of the Act and any related administrative rules; keep FCM's Form ADV updated; hire a third-party compliance auditor; attend the Securities Division's Investment Adviser Best Practices Workshop; and pay both a civil penalty and the cost of investigation. For more information, click here.